The financial crimes watchdog knew for years casino junket operators were a risk for potential money laundering but flagged it was powerless to prevent tainted funds from entering Australia.
A 2017 AUSTRAC report reveals the regulator was aware Asian junket operators used by a swath of casinos to bring in high-roller VIP players from overseas were a major money laundering and terrorism financing hazard due to the lack of visibility around where funds were being sourced from.
“Neither AUSTRAC nor the casino is privy to the agreement made between the junket tourism operator and the junket participant or any third parties,” the regulator said in its report.
“It is AUSTRAC’s view that the obscurity of the relationship between the JTO (junket tour operator) and junket participant is vulnerable to exploitation for money-laundering purposes.”
AUSTRAC in its report also noted casinos appeared to underestimate and not take seriously
money-laundering risks associated with overseas junkets.
The report, which has been tabled to the Senate, coincides with a NSW Independent Liquor and Gaming Authority (ILGA) probe into Crown Resorts to determine if the casino giant should retain its gaming licence for its Sydney Barangaroo development scheduled to open in December.
The ILGA inquiry has heard evidence that Crown’s major junket partner Suncity was linked to organised crime syndicates and allegedly laundered money through Crown’s Melbourne and Perth casinos.
In 2017, AUSTRAC said Australian casino junket operations were “broadly” compliant with anti-money-laundering and counter-terrorism financing laws.
In October, the regulator launched formal investigations into Crown for alleged breaches of Australian anti-money-laundering laws following a failed compliance check in September 2019.
AUSTRAC chief executive Nicole Rose has previously said the regulator’s 2017 junket compliance assessment was “aged” and “not correct”.
“I am told the risk assessment has now aged and is not correct,” Ms Rose told Senate Estimates in October when handed a heavily redacted version of the report.
“The issue with junkets … is that they are hosted offshore, and there are challenges with the legislation with us being able to regulate junket operators.”
Its reports detailed the regulator was unable to determine the ultimate source of the gambled funds or able to verify where winnings were distributed after settlement with the junket operator.
AUSTRAC also noted state-based gaming regulations were limited in being able to mitigate money-laundering risks through junkets, and casinos relied on the Department of Immigration and Border Protection for due diligence checks.
Originally published as Watchdog powerless to stop money laundering